Question

Concord Window Cleaners' monthly income statement at several levels of activity is as follows: 2,000 4,200 8,200 $ 3,900 $ 8,190 $ 15,990 1.400 2,940 5,740 2,500 5,250 10,250 Windows washed Sales revenue Cost of goods sold Gross profit Operating expenses Advertising expense Salaries and wages expense Insurance expense Postage expense Total operating expense Operating income 400 1,320 400 400 700 920 200 200 440 945 1,740 2,465 760 $ 2,785 $ 200 1,845 3,765 6,485 $ (a) Identify each expense as fixed, variable, or mixed. Cost of goods sold variable Advertising expense fixed Salaries and Wages expense mixed Insurance expense fixed Postage expense variable

Answer 1

Preparation of contribution margin income statement 6400 windows) Particulars Amount($) Per Unit Sales revenue $ 12,480$ 1.95 Variable expense Cost of Goods sold $ 4,480 $ 0.70 Salary expense $ 640 $ 0.10 Postage expense $ 1,472 $ 0.23 Total variable expense $ 6,592 $ 1.03 Contribution margin $ 5,888 $ 0.92 Fixed expenses Advertisement expense Salaries expense Insurance expense Total fixed expense $ $ $ $ 400 500 200 1,100 Operating income $ 4,788 Workings: Particulars Sales revenue COGS Gross profit 2000 units 4200 Units $ 3,900 $ 8,190 $ 1,400 $ 2,940 $ 2,500 $ 5,250 Differencial per unit $ 4,290 $ 1.95 $ 1,540 $ 0.70 $ 2,750 A total 6400 units $ 12,480 $ 4,480 8,000 220 Operating expense Advt expense Salary and wages Insurance expens Postage expense Total Operating expense $ $ $ $ $ 400 $ 700 $ 200 $ 440 $ 1,740 $ ماما میاد 400 920 200 945 2,465 $ $ $ $ $ $ $ 0.10 $ - $ 0.23 unni $ $ $ $ $ 400 1,140 200 1,472 3,212 505 725 Operating income $ 760 $ 2,785 $ 2,025 $ 4,788 Per unit salary = $ 0.10 for 2000 units = 2000*$ 0.10 = $200, hence fixed salary = 500 For 6400 units = (6400*0.1)+500 Variable = 6400*0.1 Fixed $ 1,140 $ 640 $ 500 * Postage Per unit rounded to 2 decimals i.e., $0.23 * Kindly Comment down for any clarifications/ queries and please upvote.